The ‘Magic Number’ Of Annual Inventory Turns For Manufacturing Companies

The ‘Magic Number’ Of Annual Inventory Turns For Manufacturing Companies

  By Suzy Strutner, managing editor at Grow Wire

In short: 

  • In manufacturing, inventory turnover is an especially useful benchmark for evaluating your company's success.
  • And overall, one of the best ways to improve your business is to compare your performance to that of your peers.
  • Thus, the chart below shows benchmarks for key manufacturing KPIs -- including inventory turnover -- so you can evaluate your company's financial prowess and make improvements if needed.

In manufacturing, inventory turnover is a sign of how efficiently products are moving along your company's supply chain. Your business's inventory turnover ratio can help you pinpoint a pace of sales that leaves items neither obsolete nor perpetually out of stock. 

Other key benchmarks in manufacturing include IT spend, the number of days sales are outstanding and the time it takes to close the books.

The team behind Grow Wire routinely measures the financial health of manufacturing companies worldwide with help from Finlistics, a sales insights company. Their recent research can help you analyze exactly how your business compares to others from a financials standpoint.

Take a look at your turnover ratios and financials, then use the chart below to determine if you’re performing at a “Marginal,” “Competitive,” “Best In Class” or “Transformative” level. (As it turns out, a "Transformative" manufacturing company turns over its inventory 11 times per year.)

If you want to improve your standing, then you may want to make some changes. Of course, reading stories on Grow Wire can help too.